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  CSPAN    Capitol Hill Hearings    News/Business.  

    February 27, 2013
    1:00 - 6:00am EST  

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to hundreds of nominees for senior department defense positions over the course of the last five administrations. despite his compliance with the same disclosure rules that apply to everyone else, there have been innuendos that senator hagel was trying to hide something. for instance, senator hagel has served with a number of distinguished vehicles --we have a senator suggested that in the evidence -- without any evidence that the fees he received for his services aimed directly from saudi arabia and or north korea. another senator suggested that we should postpone a vote on a nomination because fox news was going to run a story tomorrow regarding some speeches that
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were made and paid for by foreign governments that may not be friendly to us. that story died before it was aired. it was apparently based on a hoax. these are unfair innuendos. they have been answered. you know they are unfair. senator hagel has an extensive record of service to his country. as a young man, he enlisted in the army, served with distinction in vietnam, he served as the deputy administrator of the va during the reagan administration, he was a businessman. many of are bit him during his two terms in that u.s. senate eerie decency left, he has continued to serve -- many of them served with him during his two terms in the u.s. senate before he left. he has continued to serve. senator hagel has been endorsed by five former secretaries of
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defense, three former secretaries of state, and six former national security advisers who served in both democratic and republican administrations. he has been endorsed by the veterans of foreign wars. he has received this important -- and the non-commissioned officers association. last month, senator hagel was endorsed in a letter signed i sit former u.s. ambassadors to israel -- signed by former u.s. ambassadors to israel. he later stated in part, "we support strongly and without a vacation president obama cozy nominee chuck hagel to be the next secretary -- "we support
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strongly president obama's nominee chuck hagel to be the next secretary of defense." his political courage have impressed us all. he has stood up for what he believes is best for the united states. time and again he has chosen to take a path of standing up for our nation rather than a path of clinical expedients. he has supported the pillars of a strong military, robust ownership, a commitment to the security of israel as a friend and ally, a determination to stop the proliferation of new layer weapons, the defense of human rights as a core principle of america's role in the world. we urge speedy confirmation of chuck hagel. this is next down being -- this
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is an outstanding patriot. if confirmed, senator hagel will be the first former enlisted man in the first veteran of the vietnam war to serve as secretary of defense. his background gives a senator hagel and invaluable respective but only with respect to the difficult decisions and recommendations that a secretary of defense must make regarding the use of force and a commitment of u.s. troops overseas, but also with respect to the day to day decisions a secretary of defense must make to ensure that our men and women in uniform and their families received the support and assistance that they need and deserve. it would be a positive message for our soldiers, it sailors, airmen, and remains to know that one of their own old the highest office in the department of defense. the president needs to have a
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secretary of defense in whom he trusts and would give him independent advice and is a person of integrity and one who has a personal understanding of the consequence of the decisions relevant to the use of military force. senator hagel certainly has is critically important qualifications. he is well-qualified to lead the department of defense. the vote, which is coming at noon, is a vote to invoke and end to the debate so we can hopefully in some future our finally vote on this important nomination and end a situation where this nominee is in limbo and the leadership of the department of defense is uncertain and in limbo as well. the time has come to vote on the nomination of senator hagel.
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to do that, we must end the debate. mr. president, i yield the floor. >> the senator from oklahoma. >> mr. president, i agree with what our established chairman of the committee has said. senator hagel has a brilliant military career. i look at my time and his time in the army. that is not the issue here. i think it is interesting that in the debate we had on the floor, all the time and the democrats have talked about his military record.
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there are some things that have to come out. they are very significant. first of all, what we are going to vote on at noon today is a vote that is a simple majority and that will be automatic. those on the hagel nomination must be reflected on the boat that will take place -- vote that will take place at noon today. we are a little bit scarce on time. let me make it real clear -- this is a vote that makes a difference. if they are able to get 60 votes for the hagel nomination, then it is over. i do want to say a couple of things for clarification. one is a 60 vote threshold. i have been listening to some of the pundits on television.
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one of my a rate is one of the far left on television -- one of my favorite is one of the far left on television. she was saying that this is something that had never happened before. we never had a 60 vote margin. that is not true. it happens all the time. it is a normal thing. that is how significant this confirmation is. and not go for a long amount of time. i will go over some of these. kathleen sebelius, for example, 60 vote margin. here's an interesting 1 -- back when president bush was a republic -- was the president, he nominated stephen johnson to be the epa administrator. stephen johnson was a democrat. the other side had been saying
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no, we will demand this. they got a 61 vote from that. simmer the secretary of interior. the idea that this is the first time is not right here and i would appreciate it if people would be a little bit more honest when they are looking at that issue. they also have said that we are -- no one is more sensitive or have spent more time talking to troops than i have. we do need a confirmed as secretary of defense. leon panetta says he will serve his time until a new one is confirmed. 60we can't come up with votes, -- i called up leon
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panetta not too long ago. and nominate someone else and we'll run it there. i'd even help them. i called up leon panetta not too long ago -- i guess i shouldn't say this on the floor, but did -- and i said why don't you agree to serve again. he had family reasons and i certainly understand that he was unable to do it. michele flournoy, i commented she would be one. i don't agree with her philosophically on a lot of things, but i think she would be one that would not be controversial. ash carter. we have a lot of them out there that could be confirmed in a matter of minutes, and i would be right there with them in order to try to help that to take place. i do want to say something about advice and consent because sometimes people don't understand it. i had someone go back and research this, and it's something that's done me a lot of good because i didn't really have the background on it. this starteday back in 1787, the constitutional convention they talked about it. back then they used the term, they used the term "approbation
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orejection of the senate." means the same thing. so this has been going on for a long period of time. certainly in the "federalist papers," hamilton talked about it. as long ahe talked about any other subject. and so this i the rejection language that was used at that time that is advice and consent today. where are we today? certainly the distinguished chairman of the armed services committee, fro whom we just heard, is one of the strongest supporters of advice and consent, who has said it is shocking and sad to me that the senate may vote on this nominee -- this could happen to any nominee -- while senators are being denied critical relevant information. the ranking member, or the leader of the senate has said many times, he said raising the impression that the nominee and the white house have something to hide.
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this is exactly what now is going in reverse. and it goes on and on with different ones who have stated over and over again the significance of the role that the senate has in advice and subsequent. john kerry said, what the senate has to decide is whether it's going to stand for the rights of the committees. the rights of advice and consent. the senators ought to respect the fact that both the chairman and ranking member had requests and whose requests had not been fulfilled. it's exactly what's happened now. we have one of the new sators with whom i've learned to have a great deal of respect, senator cruz. and i was talking to him last night. i said, you know, you ought to come down and let them know why it is that you are -- you're not speaking on this. he said, look, what else can i do? i have requested over and over and over and over again information on our nominee for
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secretary of defense, and i've been denied. i've been stonewalled. what else can i say? you know, i said maybe it sounded a little extreme the other day when i said i'd walk through fire for the ability of our members on the committee to get all the information that they are entitled to. and he has not received that information. and that's something that i think is a very critical thing. now what i want to do is in this short time i have left over -- and by the way, i would ask unanimous consent if following me, if senator coats could be acknowledged for five minutes. mr. durbin: reserng the right to object, i've been waiting to speak. mr. inhofe: after the remarks of the senator from illinois, that he be recognized. a senator: i have no objection. mr. inhofe: thank you very much. the presiding officer: without objection. mr. inhofe: the problem i had was really not with information that i had
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i didn't need any information. i didn't request any additional information. many pheplgs did. many -- many members did. many members on the republican side did not receive the information they asked for. that was the case with senator cruz. i had a different reason. mine is while i think so highly of senator hagel and the work he did while he was in the vietnam war, and he was in fact a hero, you look at these people and you say what is their philosophy. he was one of only two that voted against sanctions for iran, one of only four that votedgainst an effort to make the iran revolutionary guard a terrorist group, to designate that. and one of only four that refused to sign a letter of solidarity with israel. this global zero movement is a nuke-free world, that sounds so good and that's something that president obama has talked
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about. he whistfully looks at the day where we have a new free world. that sounded real good in the days back of the cold war. i look wistfully back at the days of the cold war. back then we had two superpowers. they were predid i believe. we knew -- they were predictable. we knew what they had. that doesn't mean anything to the middle east. global-zero sounds good until you rail realize that we have countries like iran who even our nonclassified intelligence says is going to have the capability and delivery system by 2015. this is something that is not like it used to be. i am cornered wit concerned wit. in the years i have served on the armed services commit, i have never seen this done before but he agreed to allow senator
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cruz to use a video. that was the video that had the al jazeera interview where he agreed with their position -- i'm talking about he, senator hagel -- that israel has committed war crimes,hat israel has committed sickening slaughter, that america is the world's bully. well, these are things that really concern me. h-about the attitude toward israel and i understand you can go back and get a lot of poo --a lot of people in the past to sign a letter. but i would x on the next "washington journal," our guests are ari berman andhans von spakovsky of the heritage foundation.
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later, keith lang on warnings by the transportation secretary, ray lahood, on how the automatic cuts will affect the travel industry. washington journal is live starting at 7:00 a.m. eastern on c-span. >> british prime minister david cameron takes members from the house of commons. every wednesday morning at 7:00 a.m. eastern on c-span to. >> on route 66, people were travelling, either for fun, looking for jobs, maybe they were on their way to the grand canyon, maybe they were on their way to work in the aggregate representative fulfills in california. route 66 was just a way to get somewhere.
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, after all the snake pit and tourist traps and attractions and the cafes and motels, and the trading post, when those things started springing up, it became like a big amusement park along route 66 and that became the destination. to the of that, let's go beach in california, it was bad, let's go down route 66. >> it your kicks on route 66 from albuquerque, new mexico. our local content vehicles look behind the scenes in albuquerque, saturday at noon eastern on c-span2 and sunday at 5:00 on american history tv on c-span3. >> house republican leader said that the president and senate
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democrats bear responsibility for sequestration. house speaker john boehner said it is time that the senate's "get off their ass" and pass the bill. this briefing is 10 minutes. >> the president, as you are all aware, insisted that he not have to go over the debt ceiling twice and insisted that the backstop for the work of the supercommittee be the sequester. but i don't think the president's focused on trying to find a solution to the sequester. the president has been traveling all over the country, and today going down to newport news in order to use our military men and women as a prop in yet another campaign rally to support his tax hikes. now, the american people know the president gets more money he'll spend it. the fact is he's gotten his tax hikes. it's time to start focusing on the real problem here in
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washington and that's spending. the president has known for 16 months that this sequester was looming out there. when the supercommittee failed to come to an agreement. for 16 months the president has been traveling all over the country holding rallies instead of sitting down with senate leaders in order to try to forge an agreement over there in order to move a bill. we have moved the bill in the house twice. we should not have to move a third bill before the senate gets off their ass and begins to do something. >> good morning. the speaker said the president's going to be in newport news, virginia, and talking to families in the commonwealth. i tell you, i'm concerned about families in the commonwealth. i'm concerned because they're concerned about their future and the uncertainty which looms because of this sequester. now, the president has said, well, he wants a compromise, but if you take a look what's going on, there's been four years of spending increases and
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now the president says, we can't have any progress on this sequester unless we get the second tax hike in eight weeks. that's not compromise. then he says, your choice is going to be taking criminals off -- letting criminals out of jails and onto the streets or give me a tax increase. that's not compromise. that's a false choice. you know, we have tried in the house, as the speaker said, again to bring forward measures that actually accomplish reform and cut spending. we've even taken things that the president had in his very own budget to say, please join us, and he won't accept those proposals unless we raise taxes. now, it's time for the senate to come together with us, sit down with the president and let's get this resolved for the american people. >> as many of you know, you've heard about this argument for quite sometime. let's put it in perspective.
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this idea came from the white house when the house passed the bill twice, what did the president do? he threatened to veto if we dealt something different on sequestration. now as the time looms, the president does exactly what he continues to do. he does a road show. the fundamental question here the president has to decide, does he want to be president of a political party or does he want to be president of the united states? it is time for leadership. it is time for him to engage and come down one mile, deal with the senate if he really wants to lead. >> we are three days away from the president's plan unless the senate takes action. the president proposed the sequester, the across-the-board cuts that disproportionately impacts our military, and now he's on the road in newport news today, over 180 miles from
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washington, d.c. he's traveled over 5,000 miles the last two weeks, and we challenge him, mr. president, travel a mile and a half up here to capitol hill, sit down with harry reid and urge the senate democrats to take action. the president says this is a bad idea, but yet he's not put forward an alternative idea. the republicans in the house have twice taken action, twice passed legislation. the first time 300 days ago. what we need is for the president to stop using this as an excuse to raise taxes and turn it into an opportunity to start saving taxpayer dollars, start spending money more wisely. the american people, moms, dads, seniors, college students, children, they shouldn't be forced to lose their jobs or lose the opportunities that this country
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has to offer. it's time to get serious about the spending, and we need the president to lead and get off the campaign trail. >> a proud kansan by the name of william allen white once said something to the effect that the truth will always come out as the facts are fairly and honestly on display. so let's review the facts. the facts are the sequester was the president's idea. it's a fact the house has twice passed legislation to replace the sequester with smarter cuts and reforms. it's a fact that the senate has twice rejected our replacement and has set up another financial crisis. and it's a fact that the president threatened to veto any replacement to the sequester. it's also a fact that these cuts amount to about 2.5% of the federal budget. find me an american family, a hardworking taxpayer that hasn't already cut over 2% out of their budgets at home without
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cutting essential things. there's a fact that says that we are going to take in more money this fiscal year than we have ever taken in before. the budget this year, we will spend more money this year than we spent last year even if the sequester goes into effect. we will spend more money even if the sequester goes into effect. the fact is when we accepted the president's sequester 18 months ago, we made a deal. a dollar for cuts for a dollar of spending -- debt limit increase. if you wants to do the bait and switch now, we will have lied to our constituents by replacing those with tax increases. this leads you to the truth and the truth is the president needs to come back from his campaign-style tour, stop scarring people and work with us -- scaring people and work with us and get people back to work.
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theeah, we've aid said across-the-board spending reduction needs to be more targeted. that's why the house passed something last may to replace the sequester. that's why the house also passed in december last year to say this is a better way to do it. we have overspent the federal budget by $1 trillion now five years in a row. we cannot continue to do that. and so this perpetual statement of let's just postpone it, let's delay it another month is the wrong way to do it. as has already been mentioned, this year will now be the highest amount of revenue in the history of the country. with the tax increases that just came onboard of the fiscal cliff of negotiations, now tax revenue will be the highest ever in the history of the nation. this is not an issue if we have a little more in taxes we will solve this, we are spending more than we ever have. we have got to slow down our
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spending to stabilize our economy so american families are not dealing with the crisis they're dealing with. >> mr. speaker, i wanted to ask you if you think your position will be emboldened if you voted a third time. every time you talk to a house democrat they say these two votes in the last congress, their numbers have changed. they were narrow votes. >> it's time for the senate to act. it's not about the house. we've acted. where's the president's plan to avoid the sequester? have you seen one? i haven't seen one. all i've heard is he wants to raise taxes again. where's the president's plan? where is the senate democrats' plan? i want to see it. >> mr. speaker, you talked about the regular order of things. i spoke to -- no intention to be here friday or over the weekend if the sequester hits. if the president is successful, why not have the house ready to go to conference --
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>> if the senate acts i'm sure the house will act quickly. >> if the sequester hits? >> if the senate acts i'm sure the house will act quickly. >> giving the president flexibility on the sequester \[inaudible] >> you know, our goal is to make sure that the government is in fact funded, that there's no threat of a government shutdown. and we've been working with our members talking with our colleagues in the senate about how best to enact a continuing resolution to keep our government funded. >> last question, mr. speaker. you said the president has been campaigning all day. all you guys have been doing is press conference. i understand you want the senate to act. don't you end up looking like -- >> the house has done its job. we've passed a bill twice to replace the sequester. when are they going to act? when's the senate going to act? where's the president's plan to
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replace the sequester? i'm anxious to see it. thanks. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] [cheers and applause] >> hello newport news!
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[cheers and applause] >> well, it is good to see all of you here today. i want to thank your c.e.o. for showing me around. i usually don't get a chance to hang out with nuclear submarines, especially submarines that my wife has sponsored. so right there, that was worth the trip. but most importantly, it's a great chance to see the incredible men and women who every single day are helping to keep america safe and are just the bedrock of this country's manufacturing base. thank you to all of you. [cheers and applause] >> i want to thank our outstanding secretary of the navy. [applause] >> there he is right there. good-looking guy. i want to thank your mayor, mckinley price, who served his
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nation proudly. [cheers and applause] >> i want to thank two outstanding congressmen who care about this facility, care about virginia and care about the country. congressmen bobby scott is here. [cheers and applause] >> and congressmen scott rigell as well. [applause] >> the reason i came here today in addition to seeing just some incredible stuff -- it's true, every time i come to these places, i don't know how you all do it. it is just amazing work. but the main reason i'm here is to call attention to the important work that you're doing on behalf of the nation's defense and to let the american people know that this work,
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along with hundreds of thousands of jobs, are currently in jeopardy because of politics in washington. in a few days, congress might allow a series of mediate, painful, arbitrary budget cuts to take place, known in washington as the sequester. that's a pretty bad name, sequester, but the effects are even worse than the name. instead of cutting out the government spending we don't need, wasteful programs that don't work, special interest tax loopholes and tax breaks, what the sequester does, it uses a meat cleaver approach to gut
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critical investments in things like education and national security and life-saving medical research. and the impact of this policy won't be felt overnight, but it will be real the sequester will weaken america's economic recovery. it will weaken our military readiness. and it will weaken the basic services the american people depend on every single day. already the uncertainty around these cuts is having an effect. companies are starting to prepare for layoff notice. families are planning to cut back on expenses. and the longer these cuts are in place, the greater the damage. so here, at newport news shipbuilding, you guys have made an enormous investment because we've said in order to maintain the finest navy the world has ever known, we want to make sure there is an orderly
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process whereby we are continually upgrading our ships, building new ships, maintaining our ships properly, and these are some big ships. so it's expensive. and it's complicated and you have 5,000 pliers all across the country. and you have to have some certainty and knowledge about how things are going to proceed over the long-term for mike and others to plan properly. so you're rightly concerned. mike is concerned about the impact these cuts will have on not just this company, but companies and small businesses from all 50 states to supply you with parts and equipment. mike has told me you have already made $1 billion with a capital investment and you recruit and hire new people. those aren't commitments you make lightly. you have to have the capacity to plan and have some certainty
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in terms of what we're going to be doing. and you know that if congress can't get together and plan our nation's finances for the long- term, overtime, some of your jobs and businesses could be at risk. over the norfolk naval station, the threat of these cuts has forced the navy to cancel the deployment or delay the repair of certain aircraft carriers. one that's currently being built might not get finished. another carrier might not get started at all, and that hurts your bottom line. that hurts this community. because of the automatic cuts, about 90,000 in the department of defense would be forced to take unpaid leave from their jobs. that's money out of their
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pockets. money out of their paychecks. and then that means there's going to be a ripple effect on thousands of other jobs and businesses and services throughout the commonwealth, because approximate they don't have money in their pockets or less money in their pockets, that means they're less able to afford to buy goods and services from other businesses. so it's not just restricted to the defense industry. all told, the sequester could cost tens of thousands of jobs right here in virginia, but it doesn't just stop there. if the sequester goes into effect, more than 2,000 college students would lose their financial aid. early education, like head start and early start, would be eliminated for nearly 1,000 children and 18,000 fewer virginians would get the skills they need to find a job. across the country, these cuts
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will force federal prosecutors to close cases and potentially let criminals go. air traffic controllers and airport security will see cutbacks and that could cause delays at airports across the country. tens of thousands of parents will scramble to find childcare for their kids. hundreds of thousands of americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings, including more than 3,500 children right here in virginia. so these cuts are wrong. they're not smart. they're not fair. they're a self-inflicted wound that doesn't have to happen. now, the reason that we're even thinking about the sequester is because people are rightly concerned about the deficit and the debt. but there is a sensible way of doing things, and there's a dumb way of doing things.
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i mean, think about your own family, right. let's say suddenly you have a little less money coming in. will you say, we'll cut out college tuition for the kid, we'll stop feeding the little guy over here, we won't pay our car note even though that means we can't get to work? that's not what you do, right? you step back and you say, what is it that's important? our child's education, making sure they're healthy, making sure we can get to the job, keeping our house, you know, repaired and then you say, here are the things that aren't so important and you cut those out. you prioritize and you make smart decisions. well, we should be doing the same thing. now, i've laid out a plan that details how we can pay down our deficit in a way that's balanced and responsible. we have the plan right on a website, the white house
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website. everybody can go see it. it details exactly how we can cut programs that don't work, how we can raise money by closing loopholes that are only serving a few as opposed to the average american. we detailed $930 billion in sensible spending cuts that we're willing to make and $580 billion in wasteful tax loopholes and deductions that we're willing to eliminate through tax reform. and what i've said is if the republicans in congress don't like every detail of my proposal, which i don't expect them to, i've told them my door's open. i'm more than willing to negotiate. i want to compromise. there's no reason why we can't come together and find a sensible way to reduce the deficit over the long term without affecting vital services, without hurting families, without impacting
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outstanding facilities like this one and our national defense. there's a way of doing this. and the fact is there are leaders in both parties throughout this country who want to do the same. i've got to give scott rigell credit. he's one of your republican congressman that's here today and that's not always healthy for rapp to be with me. the reason he's doing it is because he knows it's important to you and he's asked his colleagues in the house to close tax loopholes instead of letting these things go through. he wants to make tough cuts but he wants to do it in a smart way. bobby scott, same thing. some of the cuts we proposed, bobby might not think are perfect but he knows we got to make some tough decisions. he just wants to make sure that you are not the ones adversely
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impacted and we're sharing down the sacrifice in bringing down the deficit, we're not just dumping on a few people and not doing it in a dumb way. senators like john mccain have made similar statements to what scott said. your republican governor, along with other governors around the country, said they want congress to stop the sequester, stop these cuts. but i just have to be honest with you. there are too many republicans in congress right now who refuse to compromise even an inch when it comes to closing tax loopholes and special interest tax breaks. and that's what's holding things up right now. keep in mind nobody's asking them to raise income tax rates. all we're asking is to consider closing tax loopholes and deductions that the speaker of the house, john boehner, said
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he was willing to do just a few months ago. he said there were a bunch of loopholes and deductions you could close. said you could raise $800 billion, $1 trillion by closing loopholes. we're not even asking for that much. all we're asking is that they close loopholes for the well- off and well connected, for hedge fund managers or oil companies or corporate jet owners who are all doing very well and don't need these tax loopholes so we can avoid laying off workers or kicking kids off head start or reducing financial aid for college students. i don't think that's too much to ask. i do not think that's partisan. the majority of the american people agree with me. the majority of newport news agrees with me. we need to get this done. [applause] but the choice is up to congress. only congress has the power to pass a law that stops these damaging cuts and replaces them
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with smart savings and tax reform. and the second i get that bill on my desk i will sign it into law, but i got to get congress to pass it. none of us will get 100% of what we want. democrats, they've got to, you know, make some tough choices too. democrats like me, we've said we're prepared to make some tough cuts and reforms, including the programs like medicare. but if we're willing to compromise, then republicans in the house have to compromise as well. that's what democracy's about. that's what this country needs right now. so -- [applause] let me just make one last point, by the way, for those who are following this. lately some people have been saying, well, maybe we'll just give the president some flexibility. he can make the cuts the way he wants them, and that way it
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won't be as damaging. you know, the problem is when you're cutting $85 billion in seven months, which represents over a 10% cut in the defense budget in seven months, there's no smart way to do that. there's no smart way to do that. you don't want to have to choose between -- let's see, do i close funding for the disabled kid or the poor kid? do i close this navy shipyard or some other one? when you're doing things in a way that's not smart, you can't go on with the pain and the impact it's going to have on the economy. the problem is, virginia, we can't cut our way to prosperity. we can't just cut our way to prosperity. we can't ask seniors and working families like yours to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest
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and most powerful. we're not going to grow the middle class just by shipping the cost of health care or college on the families that are already struggling or forcing communities to lay off more teachers or cops or firefighters or shipbuilders and then folks who are doing really well don't have to do anything more. that's not fair. and it's not good for the economy. and the other thing we got to do is stop having these crises manufactured every month. seems like -- i know you guys must get tired of it. didn't we just solve this thing? now we got another thing coming up? [applause] i mean, the thing if mike peters ran his business this way. once every month or two there would be some crisis and you wouldn't be sure whether or not you were working or not. even if it got solved,
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eventually or ultimately it would be pretty discouraging on people. you would be less productive. ships wouldn't get built as fast. you'd waste money because you don't know exactly what to expect. folks aren't sure. am i showing up today or not? if it's not a good way to run a business, it's sure not a good way to run a country. [applause] now all of you, the american people, you've worked too hard for too long rebuilding and digging our way out of the financial crisis back in 2007 and 2008 to just to see congress cause another run. the greatest nation on earth can't keep on conducting its business, drifting from one crisis to the next. we got to have a plan.
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we got to invest in our common future. our true north is growing an economy that creates good, middle-class jobs. it provides the people the skills it needs to get those jobs and making sure you're getting paid a decent wage to support your families. that's what we should be focused on, not weakening the economy, not laying people off. [applause] that's what we should be talking about in washington. and if you agree with me, i need you to make sure your voices are heard. let your leaders know what you expect of them. let them know what you believe. let them know what this country was built on was a sense of obligation to not just each other but to future generations, that we got to shoulder those obligations as one nation and as one people. you know, i was in a
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conversation with some of the governors from across the country yesterday, and i told them. i said, i have run my last election. michelle is very happy about that. [laughter] i'm not interested in spend. i'm not interested in playing a blame game. at this point all i'm interested in is solving problems. all i'm interested in is making sure there when you get up early in the morning and get to this shift at 5:30 in the morning that you know if you do a good job and if you work hard and if you're making sure that all the parts of this incredible ship that you're building is where they need to be, if you're doing what you do, then you can go home feeling satisfied, i did my job, i did my part, i can
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support my family, i can take pride in what i've done for this country. that's all i want. i want us to look back five years from now, 10 years from now and say we took care of our business and we put an end to some of these games that maybe i guess are entertaining for some but are hurting too many people. but in order for us to make that happen, i'm going to need you. the one thing about being president is after four years you get pretty humble. you'd think maybe you wouldn't but actually you become more humble. you realize what you don't know. you realize all the mistakes you make. you realize you can't do things by ourself. that's not how our system works. you got to have the help and the good will of congress. and what that means is you got
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to make sure that constituents of members of congress are putting some pressure on them, making sure they're doing the right thing, putting an end to some of these political games. so i need you, virginia, to keep up the pressure. i need you to keep up the effort. i need you to keep up the fight. if you do, congress will listen. if you stand up and speak out, congress will listen. and together we will unleash our true potential and we'll remind the world just why the united states builds the greatest ships on earth and is the greatest nation on earth. thank you. god bless you. god bless the united states of america. ♪
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>> federal reserve chairman ben policy report on economic outlook. then attorney general eric holder.
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after that, cases heading to the supreme court. wednesday, federal reserve chairman ben bernanke will deliver his semiannual monetary policy report before the house financial services committee. we will be live with the second day on capitol hill, starting at 10:00 a.m. eastern on c-span3. all this week, "washington journal guests are looking at the impact of the automatic spending cuts known as sequestration on federal agencies. tuesday, jon prior, you can see his remarks in their entirety on our website at c-span.org. >> we now turn our attention to the housing industry and the housing and urban development agency.
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jon prior is joining us from politico to talk about the sequestration on housing. let's just began with the current state of the housing industry. what is it looking like right now? >> we are seeing some good news. 2012 was a real turnaround for the housing market. this morning we will see the price index come out and it would show that 2012 was the turnaround. we of seen home prices go up, we have seen home sales go up. borrowers who are under water on their mortgages, who owe more than the house is worth, are seeing some equity returns, but it is a very fragile recovery right now. we have taken it off life- support but we have not checked it out of the hospital yet. host: what could be the impact of sequester on the housing industry?
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guest: the lesson learned from the crisis is how attached housing is to the jobs market. if you take away 750,000 jobs in 2013, you will see mortgage proponents of for going forward. there are still a lot of people who are hanging on. about 2.7 million people are under water on their homes. you chip away another in come in that household, you'll see more foreclosures. you can see the turnaround again in home prices. it could go back down. the possibility for more it delinquency. it could be a real setback for this year. host: the housing and urban
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development agency, how big or small is that, and how does it compare to other agencies in the federal government? guest: the 2013 budget is about $45 billion. it supports the housing industry in the country. regulates thousands of companies. it provides financing through the fha to low income and first- time home buyers. it is not as big as some of the other defense organizations in d.c. it is not going to take the brunt of penalties that some of those agencies is -- are going to feel, but it is very sizable and has a big footprint. host: let's listen to what the hud secretary had to say about the possible impact it would have on his agency. >> should sequestration go into
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effect on march 1, it would be destructive to cut programs and those who rely on them, including hundreds of thousands of middle-class and low-income individuals. it would cause significant damage to our nation's housing market at a time when it is helping to lead our economic recovery. specifically, it sequestration would mean about 125 dozen individuals and families, more than half of whom are elderly or disabled, losing assistance provided through the house and was about to program and becoming at risk of homelessness. sequestration also result in more than 100,000 homeless and formerly homeless people, the majority of whom are families, disabled adults, or veterans, being removed from their current housing or emergency shelter program, putting them at substantial risk of returning to the streets. host: jon prior, can you flesh that out a little bit for us? what is the secretary talking about? guest: >> it is going to take
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section 8, the biggest hit is going to be to that program. the issue is, 125,000 people will be thrown onto the street on march 2. that is not how it is going to work. what they will look at first is, they will try to target the outstanding doctors that have not been paid yet. the vouchers that they are still seeking someone to work with, and they will withdraw that money first. from there, they will start making cuts on vouchers that may come to or expired in two or three months. those people who are looking for a new home, they are expected to
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leave soon. representative process that would take place over two or three weeks at the end of march. it is going to be a process, but it is still painful cut for the people who depend on these vouchers. host: they said 75,000 your housecoat -- households receiving foreclosure provincial, rental or homeless counseling. what does that mean for the foreclosure rate in this country? guest: >> it becomes something of a disaster. in places like new york, it can take up to one dozen days to finish the foreclosure process. there are different policies coming down from different agencies here in d.c., that
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although it does provide more options for homeowners to avoid foreclosure, it is a very lengthy process, and you will need a housing counselor. some of the best scenarios i have seen is that people go for one of these cut approved agencies can access some of those options like a modification or refinance, for some of these new programs. if you take away those counselors, it becomes very difficult for people to navigate. seen't think you will foreclosures by immediately, but because there is such a backlog in this country, there are roughly 1.2 million homeowners who are somewhere in that foreclosure process, and there is another 10 million or so people who are trying to get by, somewhere in the delinquency stage. if you take away those housing
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counselors, there is less hope for them to try to navigate through that very complicated process. host: atop the lapoint is fha backed loans are slowed. the federal housing and ministration explain their role in the market. guest: >> fha provides insurance on home loans, again mostly for minority communities and first- time buyers. the issue is that fha right now faces an that was something estimated. the white house was rigid budget was supposed to come out in march. they will have their own estimate for what that should be. the fha has until september of
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the fiscal year to cover that portfolio, put in policy changes, and a lot of people there are working very hard to cover that shortfall, whatever will be estimated in march. if the sequester goes into place, you will take man power away from the agency to try to cover that. if not, they will try to pull another housing bailout, something more unsavory than some of the budget cuts we are considering here. >> at one point, he had to write a small paragraph that said, basically, people are asking what happened. this is after what happened with his wife in seattle. when he says week, it is a lane and john. it is not charlie and john. somebody must have said to him, where is charlie?
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steinbeck must have written a page and half. people ask, where is charlie. he is fine, yadayada. what he did is editors went in and expunged the lane from the west coast entirely. almost 30 days of her presence with john on the west coast. they were basically on a vacation. nbeck l contends stenbecibeck took too many liberties. >> should sequestration took a fact friday, ben bernanke cautioned in the near term, this would be a drag on economic every -- recovery.
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chairman sir 90 will deliver the same report to the committee on wednesday. this is two hours. [gavel] >> the committee will come to order. before we proceed with the hearing, the committee will briefly meet in executive session to adopt the committee rules of procedure, budget resolutions, and jurisdictions. neither i nor the ranking member made any amendments to the current committee rules here.
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i know we have been part of the senate wide a partisan process over the last several months to conform to certain standard questions to be asked of all committees. that integration process is still ongoing. the working member and i have agreed to withhold for now i'm proposing any changes to the current committee questionnaire -- are proposing any changes to the current committee questionnaire. any proposals vote? if they are none --
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i understand that a senator has an amendment. senator, you have an amendment? >> thank you, mr. chairman. sorry i'm slightly late. this amendment is simple because of the enormous changes brought on by dodd frank and the significant because of that to this committee from the secretary of treasury and his responsibilities under dodd frank. this was an amendment to the committee rules and asks the chairman to invite any nominee to that position starting with mr. lew to testify before this committee. it would not involve any sort of vote regarding the nomination. it would regard full testimony akin to what he gives before other committees like finance.
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>> i understand that the senator's interest in inviting jack lew to testify for this committee. i do not think it is necessary to mend the committee rules to accomplice that -- accomplish that goal. changing the rules would be a mistake. i want to assure that a senator's interest for mr. lew on a ridge of issues has made clear that i intend to invite him before the committee soon after he is confirmed. but finance committee has primary jurisdiction over his
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nomination. second, i do not think we should start down the path of trying to mend the committee rules depending on our individual preferences for a particular hearing. that is why we consult with the ranking member and other members of hearings. third, i'm concerned that mending our rules in this way -- no senate committee has such a rule. finally -- >> i'm sorry. >> the proposed rules change is unworkable. i urge my colleagues to uphold this amendment.
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>> mr. chairman, if i could respond briefly and maybe suggest a middle ground? first, i think a formal rule change is appropriate because of dodd frank and the enormous significance of that treasury secretary to matters under the direct jurisdiction of this committee. that is a permanent change. be that as it may, i would be happy to withdraw this amendment if the chairman would invite mr. lew to testify before
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his confirmation. >> the process is already moving. i assure that the senator that we will invite him as soon as his confirmation is complete. >> ok. i will take that as a no, but i would still like a vote on my amendment. >> with that, if there is no further debate, the question occurs on the amendment. all in favor, say aye. >> could i call for a roll call vote? >> yes.
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>> the court will call the roll. >> i'm sorry -- i'm understanding that you will invite mr. lew and he has agreed to come and the only debate we have is you want him before? >> correct. >> we do not have jurisdiction in this committee. >> i just want information. it does not matter whether i get it before or your as long as i get the information i need. >> unless you use it against his confirmation. >> i think it would be useful to have the discussion before. >> if you are going to find out if you will vote for are not the confirmation, we are all
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bound to find it in the finance committees hearings correct? i'm sure he'll come talk to you like he did with everyone else before hand. you're not blocking him coming here, right? he will come and talk to us? >> yes. >> thank you. >> anyone else? the clerk will call the roll. >> mr. chairman? >> no.
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>> mr. schumer? >> no. >> mr. brown? >> no. >> mr. warner? >> no. >> mrs. hagan? >> she votes no by proxy. >> mrs. warren? >> no. [inaudible] >> aye.
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[inaudible] >> aye. [inaudible] >> aye by proxy. [inaudible] >> aye. [inaudible] >> what is that? >> the amendment is not agreed to and blocked by the committee rules of procedure. all those in favor, say aye. >> aye. >> those opposed, nay. the ayes have it. these documents are approved and unblocked.
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i ask for the unanimous consent that to make any technical and permanent changes and that the rule be waived. being there no objection, it is so ordered. we will move to the hearing. this hearing has been bernanke according the monetary policy. growth has been slow, but positive and steady in part to
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the fed's on monetary actions. over 6 million new jobs have been created, but we should not sacrifice those gains by slamming on the brakes now. automatic cuts will take effect in a few days and could send our economy in a reverse at a time when we should continue moving forward in creating jobs. there are suggestions that the sequester would cost us 750,000 jobs this year. in addition to layoffs for cops, firefighters, and teachers, it could devastate communities. it would impact many of the most vulnerable citizens, including kids, seniors, and the disabled, at a time when the
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u.s. bases are in an array of national security strikes, the sequester would affect our military readiness. it is unacceptable that we are launching from one crisis to the next. americans have had enough. they're making it harder for families to make ends meet. there was a fight over the debt limit and the fiscal cliff after the lehman brothers failure. this has consequences. if consumers cannot spend, businesses will not prosper.
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if businesses are not hiring, our economy will not grow. it is that simple. we must do all we can to restore confidence in not only our financial system, but also in our ability as a country to take our long-term challenges in a responsible and bipartisan manner. we need a plan that is balanced. there are things this committee can do to help achieve these goals. from rigorous oversight to
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confirming well-qualified nominees, we need to reach consensus. our steps this committee can take to reassure consumer confidence and move forward with long-term plans and strengthen our economic recovery. chairman bernanke, i look forward to your views as both the fed and the congress pursue supporting our nation has to be asked economic recovery. >> thank you, mr. chairman. we will hear from our federal reserve chairman, ben bernanke. he will testify on the monetary policy and the state of the economy. mr. bernanke, thank you at the
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offset for your efforts to improve the transparency of the federal open market committee. so much is at stake for the u.s. economy. the fed has the responsibility to make as much information available to the american people as possible on its actions. i also thank you to your steadfast reminder to us that most of the important issues is the fiscal situation. i agree. fiscal reform and economic growth should top the list of our priorities in congress. you need to adjust the federal spending problem and reform our
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broken tech system and promote a sustainable and economic recovery that will result in increased jobs. unfortunately, some officials are looking for an easy way out, by claiming our fiscal problems are nearly solved. nothing could be further from the truth. our economy contracted in the last quarter. our unemployment rate remains too high. medicare will be insolvent in 12 years. social security will be insolvent after that. unless we take steps to reform entitlements and make them solvent for generations to come, our fiscal problems are far from solved. in addition to our own fiscal situation, the ongoing banking crisis in europe also presents substantial risk to our economy.
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in response to unsustainable fiscal policies here and abroad, such thinkers throughout the world have turned to unconventional monetary policies over the past few years. near zero interest rates and large-scale purchases and record size central bank balance sheets have become the norm. however, some authorities have become increasingly concerned that the cost of prolonged easing policy outweighs the benefits. in an annual report released last june, the bank of international settlements laid out the risk entailed with the worldwide expansion of the central bank balance sheets and their extended low interest rate policies. not only did their report concluded that such actions might delay the return to a self-sustaining recovery, but the great longer-term risk to central banks credibility and operational independence. more recently, the minutes of the january meeting showed that several members expressed concern that the fed easing policy could threaten the financial stability of the united states. these concerns warrant serious consideration given the scale, scope, and duration of unconventional monetary policies. the fed has kept the target range from zero to one quarter of a percent for more than four years. they have engage in multiple rounds of asset purchases commonly referred to as quantitative easing. they are currently buying agency backed mortgages for months and $45 billion of budget securities per month. it is a total monthly pace of $85 billion. annually, that is more than $1 trillion. as a result of this large-scale asset purchase, the fed has ballooned its balance sheet to
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more than $3 trillion and growing. i look forward to hearing from chairman bernanke about the concerns raised about the risk of prolonged easing monetary policy and why they cannot overcome this policy. i also look forward to hearing from chairman bernanke on this uncertainties around the dodd frank. what specific legislation can be achieved to remove this uncertainty? at our last hearing, chairman bernanke confirmed that regardless of congressional intent, thinking regulators are required to have some margin requirement under of it is unless congress changes the statute. chairman bernanke also confirmed that the fed is comfortable with an explicit
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statutory exemption. i look forward to hearing his suggestions for other legislative issues around dodd frank that could garner support. these issues are critical to us. i appreciate your attendance at this hearing. >> thank you, senator. this morning's opening statements will be limited to the chairman to allow more time for questions from committee members. i want to remind my colleagues
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that the record will be open for the next seven days for opening statements and questions for the record and any other material that you would like to submit. now, we like to introduce our witness, ben bernanke, and chairman of the board of governors of the federal reserve system. it is a position he has held since february 2006. thank you for being here today to testify on the monetary policy report. your written statement will be included and on the record. you may begin your testimony. >> thank you, mr. chairman, ranking member, chair members. i'm here to get my monetary policy report.
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i will begin with a summary on economic positions. since i last reported to this committee in the middle of 2012, economic committee in the u.s. has continued to expand at a moderate and somewhat on even pace. in particular, gdp is estimated to have risen at an annual rate of about 3% in the third quarter, but has been flapped in the fourth quarter. the gdp growth does not reflect the recovery. economic activity was temporarily strained by weather-related disruptions and
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a few volatile categories of spending. information suggests that economic growth has picked up this year. consistent with a moderate pace that economic growth, conditions in the labor market have been improving gradually. since july, the unemployment rate has declined. private-sector payrolls have grown by 6.1 million jobs. the unemployment rate has
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fallen more than two percentage points since late 2009. about 4.7 million of the unemployed have been without a job for six months or more. millions more who are looking for full-time work have only been able to find part-time. there is harm done to the vitality of our economy as a whole.
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lengthy periods of unemployment and are shall employment can have an effect on skills. it could affect the productivity and earnings in the long-term. this leads to larger deficits and higher levels of debt. the recent increase in gasoline prices reflects the wider reframing margins and family budgets.
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inflation remains low overall. per the second half of 2012, the price rose at an annual rate of 1.5%, similar to the rate of increase in the first half of the year. measures of longer-term inflation expectations have remained in the narrow range over the past several years. against this backdrop, the f1c says it will likely run at or below the 2% objectives. with unemployment well above
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normal levels, progress toward maximum employment and price ability as required a highly accommodative monetary policy. under normal circumstance, monetary policy would be divided with reductions to the interest rates. however, the fed reserve has had to use alternative policy tools. these alternative tools have fallen into two categories. first, forward guidance regarding the f1c to anticipate a path for the fund rate. this rate reflects market -- the formulation of this guidance has evolved over time. between august 2011 and december 2012, they use calendar dates to determine economic conditions. they have agreed to provide more explicit guidance and how to expect to respond to economic developments. the current low range for the fed fund rate would be the appropriate as long as the unemployment rate remains above 6.5%. inflation is expected to be well anchored. in the new formulation, they say it allows the markets and the public -- more accurately in response to information. the committee wants to maintain recommendations as long as needed to promote a strong economic recovery with stable prices.
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the second type of nontraditional policy tool is large-scale purchases of longer- term securities. our intent to support economic growth by foot and pressure on long-term low interest rates. we have engage in several rounds of such purchases in 2008. last september, the f1c announced a purchase of -- per month. addition, they would purchase treasury securities at an initial days of $45 billion for month. these additional purchases of longer-term treasury securities replace the purchases we were conducting under our now completed securities extension program, which length of the maturity of our securities portfolio without increasing its size. the f1c indicated it will continue purchases until the reserves and there is a substantial improvement in the market. in determining the size and pace of composition of vast purchases, it would take an appropriate account of the costs. in other words, the committee continues to assess its program of asset purchases within a cost-benefit framework. in the current economic environment, and accommodation policy is clear -- on it -- monetary policy providing support for the recovery walking inflation close to the f1c's 2% objective. it has led to increased sales in production of automobiles and other goods. these developments have spurred spending. highly accommodating on a chair policy has several potential cost and risks, is the committee
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is monitoring closely. for example, it in pushing expectations would rise, putting it at risk. the committee remains confidence that it has the tools necessary to tighten monetary policy when the time comes to do so. inflation is currently subdued. expectation appears well anchored. forecasters are projecting the development of pressures. another potential costs the committee takes tuesday is the possibility of low interest rates if maintained for long long time could impair financial stability. portfolio managers to satisfy the low returns might reach for yield by taking on more credit risks or leverage. on the other hand, some risk- taking, such as when an entrepreneur takes out a loan to pursue a business, is necessary in economic recovery. in the present circumstances, they serve in some ways to reduce the risk in the system. they strengthen the overall economy, but also encouraging others to rely on funding and reducing costs for households and businesses. in any case, the fed reserve has reacted to concerns over monitoring of emerging risk in the financial system. it is an approach that takes a more systemic perspective. the ongoing implementation of reform to make the financial system more transparent and resilient. a long period of low rates is certainly warranted. we need to weigh the benefits of promoting a stronger economic recovery a more rapid job creation. another aspect of the fed
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reserve policy that has been discussed is that their implications to the fed budget to hear it the federal reserve earns substantial interest on the assets it holds in its portfolio. with expansion of the fed reserve balance sheet, returns have tripled in the past few years. however, if they economy continues to strengthen as we participate and policy accommodation is reduced to, these remittances would likely decline in the coming years. remittances to the treasury could be quite low for a time in some areas, particularly if interest rates were to rise quickly. monetary policy promotes growth and job creation, resulting that the fed remittances to the treasury. monetary policy wants to promote a more robust recovery,
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it cannot carry the entire burden for a speedy return to economic health. it will depend on the course of fiscal policy. the challenge of congress and administration is to put the federal budget on a sustainable path that will promote economic wrote and stability without unnecessarily impeding the current recovery -- promote economic growth and stability without unnecessarily impeding the current recovery. under current law, the fed deficit would narrow from 7% of gdp last year to 2.5% in fiscal 2016. as a result, the federal debt held by the public is projected to remain roughly 75% of the gdp of for much of the decade. a substantial portion of the recent progress of the deficit has been concentrated in the
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near-term budget changes. taken together, it could create a significant headwind for the economic recovery. the cbo estimates that policies in current law would slow gdp growth by about one point five percentage points this year relative to what it have been otherwise. a significant portion of this effect is related to the automatic cuts that is scheduled to begin on march 1. according to estimates, it would contribute about six tens of a percentage percentage point to the fiscal drag on economic growth this year.
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given the pace of economic growth, this would be a burden on the recovery. the site having adverse effects on jobs and incomes, is of recovery would lead to less reduction on the short run for any set of fiscal action. at the same time, the difficult process of addressing longer- term fiscal imbalances has only begun. indeed the cbo projects that the federal deficit and debt as a percentage of gdp will begin rising again in the latter part of this decade and reflect a large part of the aging population and fast rising healthcare costs. to promote economic health, they have to put the budget on a sustainable path that stabilizes the ratio of federal debt po gdp and gives the current level of debt on a
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downward trajectory. between 1960 and the onset of the financial crisis, federal debt average less than four percent of gdp. this relatively low level of debt provides the nation a much needed flexibility meet the economic challenges of the past few years. this would give future congresses and administrations that scopes to deal with these events. to address of the near and long-term, tongass and the administration should consider replacing the sequestration with policies that reduce the federal deficit more gradually in the near-term, but more
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substantially in the long run. such an approach could effectively address the imbalances and federal government. finally, the size of ethicists and debt matter, but not all programs are created equal. to the greatest extent possible, in their efforts to achieve sound public finances, fiscal policy makers should not lose sight of the need for federal tax and spending policies that increase incentives to work and save and encourage investments the workforce skills and advance private capital formation, promote research and development, and provide
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necessary reductive infrastructure. economic growth alone cannot eliminate federal budget imbalances, but a rapidly economic pie will ease the choices that we face. thank you, mr. chairman. >> thank you for testimony. please put five minutes on the clock for each member. chairman bernanke, what is your assessment and elaborate of the sequester impact on that economy in the short term it congress did nothing, and what would the impact be if there is
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another crisis with a fight over the cr? >> as i mentioned in my remarks, with respect to the sequester, cbo estimates that it would cost about six tens of a percentage of growth this year and the equivalent of about 750,000 jobs. it would be a drag on near-term economic recovery. all of the actions taken this year would be a drag of about
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one point five percentage points. that is quite significant. in that respect, an appropriate balance would be to introduce these cuts more gradually and competent with larger and more sustained cuts in the longer run to address our fiscal issues. as you noted, there are a couple of other issues this year, including the continuing resolution and the debt ceiling. i hope that congress can work together to address these issues to minimize uncertainty. the uncertainty itself is costly in terms of the private sector to land to take risk and to help grow the economy. >> that is important to our economic growth. it will have a major impact on housing. chairman bernanke, do you agree with a governor [indiscernible] what would you do to ensure to
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not hinder mortgage lending? >> mr. chairman, the qrm -- we have had to wait for it to be done before we could attack the process. the qm is intended to help consumers. it is meant to strengthen the security. responding to your question, the six agencies which are currently discussing the qrm consider the idea of making qrm identical to the qm. >> thank you for your answer. the ranking member and i sent you a letter on the attentional impacts of rules on insurance companies in community banks. i look forward to your response. chairman bernanke, there is an increased focus on security and the united states, including the financial system. that has noted the issue in
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panel reports. what is the fed doing in your own networks to strengthen financial data protection and enhance the cybersecurity in the financial sector? >> mr. chairman, your point is right. cybersecurity insurgence in the financial system has become more acute lately. there have been a number of so- called server attacks on banks, which essentially fled the websites and prevent the public from accessing their accounts. these are quite disruptive them problematic. the leadership on cyber security for the financial system is being taken on one hand by the treasury and on the other hand by the various intelligence agencies. we are engaged in cooperating with these agencies and sharing information and working with banks to make sure they have the appropriate procedures and oversight in place to deal with such problems. we do not have to press them hard. they recognize it is in their own interest to do whatever they can to rent these attacks from being affect. >> some urge the fed to focus on inflation, which has been a bigger threat since 2007. chairman bernanke, what steps has the fed taken to -- >> we have a new mandate. congress will set our objectives and the reserve will figure out how to meet them.
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we have been accommodating. in doing so, we have provided support for the economy and job growth through strengthening housing and demand for automobiles and wealth effects and the like. i would note with inflation at below the two percent policy, at the moment it does not seem like much of a concern, but as it gets closer to zero at critical levels, that risk increases. keeping inflation from going too low, it is hard to explain to people why it's a problem. it is a barrier to economic growth and stability. our policy has not traded off one of these against the other. it has supported both real growth and employment and to close to our target. monetary policy is the tool that the fed has to try to address that mandate. >> thank you, mr. chairman. mr. bernanke, the fed is
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monetary its near zero interest rate policy and how it could result in risk-taking and threaten the financial stability of the united states. what specific metrics have you used to evaluate whether these are increasing? >> we have greatly expanded our resources that we use in the monitoring process. we have created an office for financial stability. we are working with an oversight council. in the amount of effort we have into this has greatly increased. our internal monitors report regularly to the board. our discussion on the monetary policy includes discussions of financial stability issues. the kind of metrics that are used on things like leverage our people who are invested in leverage.
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interest rate risk or other kinds of risks that are concentrated. the fed is anxious. we have spent a lot of effort looking to banks and other financial institutions trying to ensure that they have appropriate capital or liquidity and are managing their risks. there is a wide range of which we look at this. we have been watching this carefully. this is a view shared by others on the committee. they are not concerned that
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they outweigh the benefits of trying to support the recovery. >> thank you. i would probably disagree with those conclusions. i know my colleagues will get into this. if we are able to achieve some bipartisan consensus on steps to improve dodd frank, what are some provisions that you think need location or improvements for reconsideration? >>. frank is a complicated piece of legislation that addresses many issues. reduce costs without losing the purpose of the regulation. something along those lines would be doable. but fed is willing to work with you closely.
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in terms of specific, we want to do the work, but you mentioned in your opening remarks of clarity. there is an area which is the pushout initiative for derivatives. the burden falls heavily on small community banks, which do not have the resources to manage those regulations very effectively. i would say that we ought to work together to find ways to lower that burden for smaller institutions. >> thank you. i appreciate your advice and your willingness to work with us on this to try to improve. last issue -- i want to talk about the crisis in europe. elastic the european union released its 2013 forecast for the year on the euro zone
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economy. it was predicted that the eurozone will shrink for the third year in a row. what specific risk is a prolonged recession in europe exposed the u.s. economy to? >> given the risk on and off the waiver we have seen from the markets, the european central bank has taken a number of important steps, including the monetary transactions that help to bring down the sovereign debt yields for the more fiscally challenged countries. that has been helpful. there are a number of steps that have reduced the financial stresses in europe. that remains a concern. the financial stresses are certainly less today than they were over the last two years.
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at the same time on even if the financial stresses have -- the eurozone is in recession and unemployment is rising, that effects us in a number of ways, partly the financial sector, but also on trade. our economy prospers when we can export. the european market is important. we have noticed our decline in our ability to export to europe. that is a risk as well. >> thank you. >> senator reed. >> thank you for your testimony. over the last several years, the fed has been providing stimulus through qe and other programs. it seems that our fiscal policy is not complementary to your policy. it seems contradictory. if we could add jobs rather
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than subtract them and add growth and close the deficit and provide an opportunity in the long run to solve some of these challenging problems -- if we continue to sort of use austerity as a major approach, that would complicate your ability as you suggest in a measured way to move away from quantitative easing at the right time. can you comment? >> monetary policy is no panacea. it is no clear all. we do not have the ability -- we can all agree on how powerful these measures are. they are effective. i do not think they can set off
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1.5 percentage went up discover string we are seeing this year. in terms of the nearer term recovery, there is a sense in which there is cross purposes. i want to be clear -- to some extent, the fiscal policy decisions being made are mismatched with the timing of the problem. the problem is a longer-term problem. it should get just over a longer timeframe and in a way that does no harm. that is the kind of balance i
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hope this congress will consider. >> so do i. i might be repeating myself. if our policies were complimentary, there would be cross purposes. is that your sense, too? >> on one hand, you would have fewer cuts and greater growth. it is true that to get less bang for the buck because of the short-term on growth, you would get in longer and larger long-run deficit impact and do less damage to growth process by looking at this over a longer timeframe. >> thank you. let me turn to another issue.
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there are rules allowing the use of mortgage-backed securities and liquid assets, etc. do you intend to follow that approach? risk taking and adding leverage to the financial market? >> i think that will be our starting point. we need to start with international agreements and act to what extent we need to strengthen and customize it for the u.s. there has been a significant amount of discussion on what was reasonable and what might be the side affects and the like. but was a bit of reiteration in terms of what the international agreement was. we will meet with international agreement. we will look to see whether additional steps is necessary. >> very quickly, a senator touched on the european situation. from afar, it seems that there policy of austerity has not helped them grow at all. it complicated their economic situation. is that a fair assumption? >> they have high interest rates and a variety of other factors
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affecting their economies. again, i would say that it is possible to achieve both objectives, short-term growth and longer the fiscal sustainability. >> thank you. >> senator shelby.
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>> thank you. the portfolio balance sheet of the fed you said it was $3 trillion? >> yes. that is about right. >> it was about $3 trillion?
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>> yes, sir. >> has there ever been that type of balance sheet close to that? >> i do not think so. >> ok. does it concern you not how to add to the balance sheet, but how to deleverage the balance sheet? will that be a challenge to the fed?
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>> i support their towns. we have two pairs of suspenders. i think we had the technical means. picking the exact moment is always difficult. the support at the right time, not too early, not too late. we have a set of tools i would be happy to go into. doing other things, like raising the interest rate. what we are doing is time our
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asset purchases until we see a substantial improvement in the labor market, inflation remaining stable. we are also looking at the costs and benefits, including the financial stability issues that were alluded to. we have not given a specific number, but we are certainly paying close attention to all of these issues. the senator mentioned the transparency of the fed. we are having this debate in public. you may have noticed many members of the committee talks in public. we are looking at all these issues and taking them into account and we are trying to do the right balancing of our objectives. >> is your portfolio public? >> yes, sir. >> it is public. the $3 trillion of value, your
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portfolio is published as to what securities you have and what they are doing performing and nonperforming? >> they are all performing. every single one. they are treasury guaranteed. >> just about all of them are treasury. >> by law, we can only buy treasuries and agencies. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]
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the reasons for severance payments is still unclear. the amount was first reported in new york times article, which called it "unusual to go -- unusual pico -- "unusual." eagerness and skill in obtaining bonuses severed payments and perks about whether he appreciates who pays the bill. when asked basic questions like what interest did you receive or did you pay on your million-
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dollar mortgage, mr. lew could not remember. at answer does not pass a lab test. when asked about communication with citigroup regarding student loan kickbacks, he responded that he could not remember any. then he and the administration made it clear that they had no intention of providing documents to shed light on whether he was involved in those kickbacks. clearly these do not matter to them because they think they have the votes. but transparency and sunlight are essential for the congress and american people. if he will not answer our questions now, why should we expect them to answer any questions if he is confirmed quit? that is on except will. i will vote no on the nomination. quacks the house judiciary subcommittee today examines the us citizenship a verify program.
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it allows you. s employers -- u.s. employers to check on immigration status. we will be live on c-span three. quacks at one point, steinbeck had the right -- how to write a small paragraph saying that people are asking about this. when he says we, it is healing and john, not charlie and john. said to him,'ve and where is c question -- charlie? he said, when my lady fair joined me in seattle, charlie took his third position in the family thing. obviously, that never appeared in the book because what they did is editors went in and expunged elaine entirely from
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the west coast. almost 30 days of elaine's presence with john on the west coast. they were basically on vacation. quacks he -->> contends that it cannot be classified as nonfiction. more with the author of "dogging sunday at eight. introduced the bill that would redistribute the automatic defense cuts that would've been -- began friday. -- that would begin friday. quack>> good afternoon. t y for coming today. -- thank you for coming today. i am delighted to be here with you today. i am congressman randy forbes from virginia.
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i have the privilege of chairing today. i am joined today with a friend of mine, the chairman of house armed services subcommittee on readiness, rob wegman from virginia's first district. we will be brief so that we can give you as much time as you need for any questions that you might have. all of you know we are facing this looming deadline for sequestration. i've always felt sequestration was a bad idea. i thought it was a bad idea when the president proposed it, i voted against it, i fought to try to get the president not to find it -- not to sign it. after that, rob and i have been working the last year with other members of congress trying to raise awareness of sequestration across the country. very few people were talking about it. we launched an event in virginia, approximately a year ago, to try to begin raising these questions and a solution
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to sequestration. we have traveled across the country, tried to talk to people and let them know that we would be right here today where we are. we believe that sequestration is going to have enormous impacts, not just economically in virginia, we will probably suffer more than any state, but also from a strategic point of view anyway you look at it. we have a perfect storm. we are hearing people talk about sequestration, but we need to put in context it is really three things that are happening to national defense. the first is, as many know, we have taken over a half trillion dollars of cat -- of cuts to national defense. that is far too many cuts to make. they were done in a point that put us in a very difficult point in time strategically. even before we get to sequestration, the army was about ready to cut over 80,000 individuals from the army. we did not hear anything from the army for the last year or so since sequestration past
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relative to those cuts. in addition, with our ships, we have had independent panels that talked about the pact -- the fact that we needed ships in the navy base on testimony we had before both of our subcommittees. we know that the testimony is that the combatants commanders would need a fleet as high as 500 ships. the navy has always said we least needed 313 ships. they have reduced that to 306. there is hubble counting. their budgets are taking them down below the 300 figure. in addition, that 300 figure only reaches in --. the deployments are from six months now to seven month year it all of that before we get to the point of sequestration. the final part is that the air force has testified they have been in a declining state of readiness since 2003, yet we had
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another half trillion dollar cut that we have seen come into the air force. that brings us to where we are today, which is in addition to those cuts, we have the fact that we passed a defense bill out of the house. the senate fails -- failed to pass a bill. there is a lack of a budget coming from the senate. we add that to the fact that in a few days we will have sequestration among which is another half trillion dollars of cuts that will go to our national defense. we think that is a bridge too far. what have we tried to do? in addition to going across the country and raising awareness, we have tried to work on house leadership and they have successfully passed eat up -- two bills that would stop sequence ration. the senate has failed to put forward a single bill up to this point in time, and the president has not put a single proposal forward. in addition, since we did not get acceptance for those two
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bills, i have filed a bill this week that would save this. your member the president when we talk about tax rates, he said we ought to at least be able to sign what we agree upon a -- and get that off the table. all the members of the senate and house agree that sequestration is a bad idea for national defense. we have written a simple bill that sick was ration would not apply to national defense. -- sequestration would not apply to national defense. it would just say we're not going to use this arbitrary situation that we have two deal with sequestration. final points for me before i turn it over to congressman wittman is the fact that the president has traveled to virginia today to one of our shipyards.
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it is always good when the president comes to virginia to visit our shipyards during the question i leave to you is to ask this -- whether or not the president can fix sequestration in a shipyard in virginia. if he can, i wish he would have been there a year ago so we would not have to have this unstable situation we currently have. the likelihood of fixing it there is remote. i would suggest that where the president would probably be better spending his time is here in washington actually meeting with people who disagree with him so that he can try to get a revolution and hope for a compromise. the last thing is that word i just used -- compromise. we hear people talking about that. the president loves to use it. one of the things many of us are mature enough to know today is this -- if you take the long -- wrong medicine to cure an illness, it can sometimes be worse than taking no medicine. if you have the wrong compromise, it can be worse than no compromise at all. i want to point out that

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